The U.S. Department of State formally submitted to Congress on Wednesday (Oct. 14) an assessment of individuals and organizations that have violated Hong Kong’s Basic Law by providing a watch list of individuals and organizations that the U.S. executive branch may consider for sanctions. This is also seen as a warning to international financial institutions that they may face sanctions if they continue to do business with the named individuals. The report comes at a time when relations between Washington and Beijing are at a low ebb.
On July 14, President Trump signed into law the Hong Kong Autonomy Act, which was passed unanimously and quickly by both houses of Congress. On the same day, Trump also signed an executive order requiring the U.S. government to take action within 15 days to end Hong Kong’s special status treatment.
Under the Hong Kong Autonomy Act, the U.S. Department of State, after consulting with the Secretary of the Treasury, is required to submit a report to the appropriate congressional committees and leaders within 90 days of the effective date of the Act, identifying individuals and entities that have failed to meet their obligations to the people of Hong Kong under the Sino-British Joint Declaration and the Basic Law and financial institutions with which they have engaged in “significant transactions. Wednesday (Oct. 14) is the deadline for the U.S. government to submit its first report.
The Senate and House Foreign Relations Committees each confirmed to VOA on Wednesday that Congress has received a copy of the State Department’s assessment of Hong Kong. Aides to the House Foreign Affairs Committee, who wished to remain anonymous, said the next step is for Congress to be briefed and to continue its oversight responsibilities to promote full implementation of all elements of the Hong Kong Autonomy Act.
The State Department’s first report to Congress since the Act took effect lists 10 individuals who have eroded Hong Kong’s autonomy and details why each official was named.
In a statement following the release of the report, State Department spokesman Morgan Ortagus said, “The Communist Party of China has systematically undermined the autonomy promised to Hong Kong and the world in treaties registered by Beijing with the United Nations. By imposing national security laws, the Chinese Communist Party has destroyed Hong Kong’s democratic institutions, human rights, judicial independence, and individual liberties.”
“The release of this report underscores our ongoing opposition to Beijing’s deliberate erosion of Hong Kong people’s freedoms and imposition of oppressive Chinese Communist Party policies,” said Ortegaz.
The U.S. Treasury Department announced sanctions against 11 individuals, including Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor, for undermining Hong Kong’s autonomy and restricting the freedom of speech or assembly of Hong Kong citizens in early August this year.
The report released by the State Department on Wednesday, except for the absence of former Hong Kong Police Commissioner Lo Wai-chung, the other ten people mentioned in the sanctions list announced by the Treasury Department in August, also means that the ten people are labeled as “secondary sanction risk”.
The ten officials named by the U.S. government for the second time include six Hong Kong officials, including Chief Executive Carrie Lam Cheng Yuet-ngor, Chief Executive’s Office Director and Secretary of the National Security Council Chen Guoji, Secretary for Security Li Ka-chiu, Secretary for Justice Cheng Yeow-hua, Secretary for Constitutional and Mainland Affairs Tsang Kwok-wai, and Police Commissioner Tang Bing-keung, as well as four Chinese officials, including Xia Baolong, Vice Chairman of the Chinese People’s Political Consultative Conference (CPPCC) and Director of the State Council’s Hong Kong and Macao Affairs Office, Zhang Xiaoming, Deputy Director of the Hong Kong and Macao Affairs Office, Luo Huining, Director of the Liaison Office of the Central People’s Government in the People’s Republic of China and National Security Advisor, and Zheng Yanxiong, Director of the National Security Agency in Hong Kong.
Bipartisan Lawmakers Disappointed by Lack of Updates in List Report Call on Administration to Fully Implement Sanctions
Lawmakers from both sides of the aisle who introduced the Hong Kong Autonomy Act also issued statements on Wednesday calling on the executive branch to fully exercise its sanctioning authority under the bill, and arguing that the State Department should expand the existing sanctions list in its latest report.
“Communist China’s National Security Act was designed to whittle away at the autonomy and fundamental rights of the people of Hong Kong, and the United States should work to use tough sanctions against authoritarian regimes like China,” Republican Senator Pat Toomey (R-PA) said in the statement.
Toomey continued, “The State Department should expand this list and use the sanctions authority in the Hong Kong Autonomy Act to punish other officials and entities that enforce or exercise national security laws.”
Sen. Chris Van Hollen, a Democratic federal senator who introduced the Hong Kong Autonomy Act with Senator Toomey, said, “The State Department should expand the list and use its sanctioning authority under the Hong Kong Autonomy Act to punish other officials and entities that enforce or exercise national security laws. Sen. Chris Van Hollen (D-MD) also said in a statement that the bill has prompted the executive branch to act on the erosion of Hong Kong’s autonomy, but that the U.S. government’s handling of the situation is clearly inadequate.
“I urge the administration to take additional measures and would like to see them reflected in the next report. We will continue our efforts to support the people of Hong Kong as they fight for their freedom,” said Senator Van Hollen of Maryland. Senator Van Hollen of Maryland said.
First report is non-mandatory, but warns financial institutions
Under the Hong Kong Home Rule Act, within 60 days of the report’s release, the State Department will list the financial institutions that had “significant transactions” with the named individuals. The President of the United States may also consider, but is not required to consider, imposing sanctions against a person whose name appears on the State Department’s Wednesday list.
After publication of the list, financial institutions would have 12 months to cease all business with the designated individual. The bill requires the list to be updated one year after publication, at which point individuals and institutions on the updated list would formally face mandatory sanctions from the U.S. government.
Sanctions include freezing of U.S. assets, deportation, revocation of visas or other documents, and denial of visas. Sanctioned financial institutions may also face bans on entry into the U.S. and loss of U.S. dollar clearing capabilities for senior company executives.
Samuel Chu, director of the Washington-based Hong Kong Democracy Commission, told VOA he hopes the report will send a strong signal to financial institutions and businesses that they cannot continue to get rich cooperating with the human rights abusive Chinese government.
“It will put companies and financial institutions in a situation where you see that many of them are actually not only silent when they operate in Hong Kong, but they are forced or asked or perhaps even volunteered to support the crackdown, so there is now oppression in Hong Kong and that’s unacceptable. So I think it increases the stakes for those who are doing business in Hong Kong and also doing business in China,” Zhu told VOA.
In June, U.S. Secretary of State Mike Pompeo directly named HSBC as a “corporate kowtow” to Beijing, and in early June, both HSBC and Standard Chartered publicly voiced support for Beijing’s push for national security legislation, immediately drawing strong criticism from the U.S. and British governments.
On June 3, HSBC posted a message on its WeChat enterprise number, saying that HSBC Asia Pacific CEO Wang Dongsheng participated in the street solidarity “support national security legislation”. The Financial Times reported in early June that Huang Guanzhong, CEO of HSBC’s Asian operations, also signed a petition in support of Hong Kong’s national security law. Huang Guanzhong said, “We respect and support the legislation, which will allow Hong Kong to recover and rebuild its economy, while upholding the principle of ‘one country, two systems’.”
In recent months, a number of international financial institutions, including HSBC and Standard Chartered Bank, have been under increasing pressure to choose sides on the Hong Kong issue between China and Western democracies led by the United States and Britain.
Zhu said the IFIs will then be faced with having to make a real and urgent choice. “Now that banks are involved, they’re in a position where they now have to be careful about all kinds of transactions that they may not have noticed before. So I think this kind of scrutiny, this kind of pressure and public oversight will be a key tool to force China to change its behavior,” Zhu told VOA.
The Hong Kong Autonomy Act requires the U.S. president to impose at least five of the 10 sanctions outlined in the statute on the named foreign financial institutions within one year, and to adopt all of the sanctions within two years at the latest.
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